Too Big Too Fail

If something is Too big to fail then it is too big to exist. If a company is so big that it threatens our society were it to cease to exist then we cannot entrust those companies to a few people. If the risk is to all of us, all of us must own it. I don't believe we should be owning banks nor Insurance companies like AIG. But what this depression should make clear is that they cannot get this big again. They should NOT be nationalized, they should be broken up and laws put in place to make sure capitalistic competition is allowed to exist. I mean as Krugman talks about in supporting Nationalization: The four biggest US commercial banks – JPMorgan Chase, Citigroup, Bank of America and Wells Fargo – possess 64 per cent of the assets of US commercial banks... 64% by 4 companies is a problem. That is NOT competition. David Sirota has made this case the best, "If It's Too Big to Fail, It's Too Big to Be Private" I disagree I don't think we should make them public I think we should break them up and allow capitalism to take place; but his point is sound: Now, clearly, it's time to resurrect the principle that if something is too big to fail, it's too big to be private. We can resurrect that principle both through far tougher regulation that prevents individual private institutions from ever becoming so singularly important to our nation,* and by nationalizing the few core functions and services that are probably best left to the government as insurer of last resort. In the former category, that means much stronger financial regulation, and in the latter category it means some kind of nationalization of basic market insurance (and, I might add, health insurance). You need to read David Sirota. It is that simple. RSS